The amount of classified loans in the banking sector of Bangladesh reached an all-time high of nearly BDT 1.0 trillion in September ahead of the upcoming national polls.
The volume of non-performing loans (NPLs) jumped by nearly 34 per cent to BDT 993.70 billion as on September 30, from BDT 743.03 billion as on December 31, 2017 despite close monitoring of the central bank. It was BDT 803.07 billion a year ago,
However, the amount of NPLs increased by more than 11 per cent or BDT 100.30 billion to BDT 993.70 billion during the third quarter (Q3) of this calendar year from BDT 893.40 billion in the preceding quarter (Q2).
The share of classified loans also rose to 11.45 per cent of the total outstanding loans during the period under review from 9.31 per cent nine months ago, according to the central bank’s latest statistics.
The default loans include substandard, doubtful and bad/loss of total outstanding credits, which stood at BDT 8,680.07 billion as on September 30, 2018, from BDT 7,981.96 billion as on December 31, 2017. It was BDT 7,527.30 billion as on September 2017.
Senior bankers as well as experts said the amount of classified loans in the banking system has increased during the period under review, as some borrowers did not make repayment of installments against their rescheduled loans.
They also said a portion of restructured large loans has already turned into classified ones that also pushed up the overall volume of NPLs in the banking system.
The central bank cleared proposals of 11 business groups for restructuring their large loans amounting to around Tk 153.26 billion. A total of 22 commercial banks had earlier forwarded the proposals to the Bangladesh Bank (BB) for approving the loan restructuring on behalf of their clients.
A senior executive of a leading private commercial bank (PCB) indentified that political intervention has worsened the corporate governance in the banking sector, suggesting that the government should promptly take action to restore discipline in the financial sector. He also said legal complexities are one of the impediments to recovering the default loans from habitual defaulters.
(Bangladesh Business News)
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